DAN ABRAMS, HOST: Coming up, we have new video of kidnapped American journalist Jill Carroll and day one as Enron‘s two head honchos go on trial. The government says they drove the company to the ground costing thousands their life savings.

(BEGIN VIDEOTAPE)

ABRAMS (voice-over): Ken Lay and Jeff Skilling on trial in Houston, a city whose Houston Astros used to play at Enron Field, now it is a city where so many lost so much. So can they really find an impartial jury?

And the parents of a Massachusetts woman found murdered in home with her baby daughter speak out as more bizarre details emerge.

UNIDENTIFIED MALE: You‘re a liar.

UNIDENTIFIED MALE: Jim, you are sick.

ABRAMS: A former priest and admitted child molester confronts his alleged victims and their parents. We talk to one of them.

ABRAMS: Hi everyone. Before we get to all of that, breaking news from Iraq. Al-Jazeera broadcasting a new tape of kidnapped American journalist Jill Carroll, the freelance reporter who was kidnapped in Baghdad on January the 7th. This is the tape.

Carroll is apparently weeping, reportedly appealing for the release of Iraqi women prisoners. Her kidnappers have said that‘s the condition for her release. They threatened to kill her. A cutoff date has gone and past. And based on the date that is stamped on this tape, it would appear that Jill Carroll has survived and is alive past that date.

Joining me now is Alfred, one of MSNBC‘s Arabic translators and retired Colonel Rick Francona, now an MSNBC terror analyst. All right, Alfred, let me start with you. Exactly what are they saying on Al-Jazeera about this tape?

ALFRED, MSNBC TRANSLATOR: Well Jill Carroll is speaking but they did not allow her voice to be on, but the anchorwoman said that they received the tape and the tape was dated back on the 28th of this month. Jill Carroll actually is calling to the Iraqi officials, the American officials to release all the Iraqi women, so this will help to release. This tape Al-Jazeera aired is a similar tape that was aired (UNINTELLIGIBLE) the Revenge Brigade, this is unknown brigade actually and some reports early this week saying that this brigade is the same ones that kidnapped the sister of the interior minister.

ABRAMS: Let me ask you this, Alfred, with regard to the date, are they saying how they are confident that it really was made on January the 28th?

ALFRED: No, Al-Jazeera anchorwoman just mentioned that the tape has the date of January 28, but make no further information on this.

ABRAMS: All right, Alfred, thank you very much. Appreciate it. Rick Francona, look, I mean I hate to say it‘s good news when we see a tape of Jill Carroll clearly suffering on that tape, but it is good news that she is alive, is it not?

COL. RICK FRANCONA, RET., MSNBC TERRORISM ANALYST: Oh absolutely. I mean this is proof of life. This—at least we know she has survived the initial deadline and they are making additional demands. I want to say something though. If you look at her in this tape, she is obviously under distress.

But we‘ve learned from talking to previous hostages that they are forced to make these tapes, they‘re forced to appear under duress. And one of the hostages, a prior hostage even said he had been beaten up prior to making the tape so that he would appear to be distressed. So I think you know we should put this in the she is alive and hopeful category.

ABRAMS: What to make of the fact that there is this demand out there that they release all of the women who are in custody. Five I believe of nine have been released at this point, but that happened before January the 28th, correct?

FRANCONA: Right and I think that by making that their demand they are probably going to see this realized. It‘s going to be coincidental. The United States is going to say we don‘t negotiate. We are not releasing them because of this, but there will be a coincidental of release...

ABRAMS: I mean even though—I mean it would be so obvious, would it not, that this demand was being met. Isn‘t there a concern on the part of the administration that that could lead to other kidnappings...

FRANCONA: Yes, that‘s always the concern, Dan, but these women were going to be released anyway.

ABRAMS: All of them? All nine?

FRANCONA: Maybe not all nine of them, but you know it‘s probably an easy gesture to make. They can each have a fig leaf. The United States can say well we were going to release them anyway. The terrorists can say well you know we are only asking for nine people. It might be an easy way out of a really bad situation. I don‘t think they want to kill her.

ABRAMS: Yes. All right. I have to say I will be surprised if they end up releasing all nine. I think that there was a huge debate over even the release of the five. We shall see. Rick Francona thanks for joining us. We appreciate it.

Now to Houston. It is finally starting. The trial of Enron founder Ken Lay and former CEO Jeffrey Skilling began today in Houston. The two accused of fraud, conspiracy. Skilling also charged with insider trading. The defense, the company was actually in good financial shape and neither man did anything illegal.

The judge in the case said late this afternoon he will seat a jury today. But many are wondering can these guys get a fair trial in Houston? Once the seventh largest company in the country, Enron was part of the heart and soul of Houston where it was headquartered.

The Astros played at Enron Field. The company supported the ballet, museums, the United Way, employed tens of thousands of locals. They all lost their jobs. Many lost their live savings when the company went under.

Joining me now is my friend “Fortune” magazine senior writer Bethany McLean, who is also the co-author of “The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron”. Bethany thanks for joining us. We appreciate it.

All right, so was it a tough choice do you think for the judge to leave the case in Houston?

BETHANY MCLEAN, “FORTUNE” MAGAZINE SENIOR WRITER: It must have been a tough choice but he must think he‘s covered his ground pretty well because those jury questionnaires were really quite something. People who are experts on the matter say they have never seen anything like it, yet the judge chose to keep the case in Houston. And so he must believe he is on good legal ground because he wouldn‘t be risking a retrial with something that obvious.

ABRAMS: And the trial is expected to last how long?

MCLEAN: Well they said today four months. The judge says he decreased it from the four to six months to an estimate of four months, so I guess that‘s good news for all of us.

ABRAMS: I want you to listen to Daniel Petrocelli. He was one of the lead attorneys in this case. He‘s representing Jeff Skilling. This is what he said about how he‘s going to defend Jeff Skilling and I want you to respond to it.

(BEGIN VIDEO CLIP)

DANIEL PETROCELLI, ATTORNEY FOR JEFF SKILLING: The truth is that Jeff Skilling told the truth about the company. It was one of the most over disclosed companies in the country at the time. It was one of the highest profiled companies. It was one of the companies that investors and analysts knew more about than any other company and prior to the bankruptcy, Dan, there wasn‘t one law enforcement official who had any problem with Enron. Nobody came knocking on the door accusing Enron of fraud.

(END VIDEO CLIP)

ABRAMS: Bethany, it is a little bit hard to believe that the defense in this case is going to be you guys got it all wrong. Enron was actually a great company.

MCLEAN: It really is interesting. I mean in most cases there are obviously two sides to the story, but this one the divergence is just so extreme. The defense‘s contention is not only that Jeff Skilling and Ken Lay didn‘t know about what was wrong with Enron, but that there was nothing wrong.

And what‘s really interesting is that a lot of what Enron did, did meet the letter of the law and may have violated the spirit of the law, but it met the letter of the law and that makes the prosecution‘s case very tough. But I would quibble with Petrocelli‘s claim that Enron was over disclosed. I think anybody who tried to pour through their financial statements and decipher what was going on there would certainly not use over disclosed as the description.

ABRAMS: All right, Bethany, stick around for a minute. Let me also bring in the conversation Houston white-collar defense attorney Joel Androphy and former SEC attorney Howard Meyers. Gentleman, thanks for coming on the program. Appreciate it.

(CROSSTALK)

ABRAMS: All right. You know, Joel, a lot of people are saying that this could be a surprise. That the defense actually could win this case or at least that there could be a hung jury. Is that what you expect?

JOEL ANDROPHY, DEFENSE ATTORNEY: Well all they need is one juror.

ABRAMS: For a hung jury...

ANDROPHY: They don‘t need 12 jurors, yes, correct. Just one juror and that‘s possible. But I am a little concerned objectively speaking about the fact they claim that Enron did nothing wrong. That opens up an entire gap of issues in this case. Because all the prosecution then needs is to show time after time different problems and different disclosure issues. If they said we made mistakes but we relied on our lawyers. We‘ve made mistakes, but we had some management issues. That at least allows them an overall theme of things to have mistakes and to justify them later.

ABRAMS: And here‘s Mr. Ramsey, who was on the program on Friday, also who is Ken Lay‘s lead attorney making that very point about Enron.

(BEGIN VIDEO CLIP)

MICHAEL RAMSEY, ATTORNEY FOR KEN LAY: The third quarter of 2001, the quarter before the bankruptcy was the strongest quarter Enron wholesale ever had and it was an enormous profit center. It was a wonderful machine that was making money hand over fist.

ABRAMS: Howard Meyers, it is an interesting defense. I mean it does serve as an interesting model that differs from all these other white-collar cases we have seen, from Tyco to WorldCom where the defense has been yes there was definitely something wrong in the company. Either I had permission to do this or I didn‘t know people were doing it. But here they‘re saying it‘s not our fault. Enron was doing well.

HOWARD MEYERS, FORMER SEC ATTORNEY: Yes, I mean it‘s a case of when you‘re dealt with lemons make lemonade. Here you have multiple witnesses who will be presenting testimony and documentary evidence at the hearing. They‘re going to put the pieces together. Whether or not Mr. Lay and Mr. Skilling had the intent to defraud or not is going to be a jury issue and we‘re going to have to wait and see what happens.

ANDROPHY: You know Dan...

ABRAMS: Yes, go ahead.

ANDROPHY: ... one of the interesting things is that what they are doing is perpetuating the same statements that their clients did. And then the jury has to decide at the end of the day is what they told the public five years ago the same thing they are telling us today and is the fraud being perpetuated on us today. That‘s going to be a dilemma that everyone is going to have to face here, not trying to...

ABRAMS: Yes.

ANDROPHY: ... defend what happened, but basically saying what happened—we are going to argue what happened and we‘re going to tell you and it‘s our position today it happened.

ABRAMS: Yes, Bethany, the key witness or one of the key witnesses against them will be Andrew Fastow, former CFO of the company. He‘s pled already and already on the program on Friday they were both going after Fastow describing him as a crook, describing him as someone who was involved in self-dealing, et cetera. But isn‘t one of the big problems that they have when it comes to Fastow is that some of the decisions he was making for Enron—forget about the allegations that he was lining his own pockets.

But some of the decisions he was making for Enron were done to benefit the company. And they‘re basically going to be saying yes, he made these radical decisions to benefit the company and yet none of his superiors knew about it.

MCLEAN: That‘s absolutely true. Andy has pled guilty to fraud on two levels. One level of fraud was using these partnerships he ran to line his own pocket, but the other level was using these partnerships to help deceive investors about Enron‘s true financial condition. And that second level of fraud, that—those partnerships were signed off on by Ken Lay and Jeff Skilling...

ABRAMS: So how are they going to say they didn‘t know anything about it?

MCLEAN: Well they‘re going to say that it met the technicalities of accounting rules. But then that begs the question why did Enron go bankrupt? Because the money Andy Fastow stole, some $60 million, that didn‘t bankrupt the company that once had a $70-billion market cap.

ABRAMS: Well here‘s what Michael Ramsey says about why the company went under.

(BEGIN VIDEO CLIP)

RAMSEY: There are a series of converging events that caused a panic.

We were in a down—we were in—at the tail end of the bubble bursting. We were—there were a lot of other events that made the market nervous, but what put it over the edge, the catalyst was Wall Street beginning to smell Andrew Fastow and what he was up to.

ABRAMS: You know, Howard Meyers, this is a complicated case and if I were the prosecutor I‘d be nervous here that despite the fact that there seems to be a lot of evidence here that this is really one of those cases where jurors could lose focus or they could get caught up in minutia or they could believe that you know as Bethany put it that the technical aspects of the law were adhered to.

MEYERS: I agree with that. The prosecution is really going to have to dumb this down, take the jury through things piece by piece and try to get around the smoke screen that‘s putting forth by the defense. And you‘re going to have to put the pieces together to tie in Mr. Skilling and Mr. Lay to the overall fraud.

ABRAMS: Bottom line, you think they‘re going to be able to do it, Howard?

MEYERS: Absolutely.

ABRAMS: Joel, what do you expect?

ANDROPHY: Well the problem that they have here I don‘t know at the end of day, but what they‘re going to have to do is basically say we had a viable company. These witnesses destroyed our company.

ABRAMS: Yes.

ANDROPHY: These witnesses that the government cut deals with destroyed our company. The government is going to say they destroyed the company because they were told to do it that way.

(CROSSTALK)

ANDROPHY: So it‘s going to be a very circular argument at the end of day and the bottom line is...

ANDROPHY: ... if they knew what was going on and they had any idea about it and didn‘t tell the public, then the jury is going to probably...

ABRAMS: And Bethany, the conclusion of your book was not that Enron was a healthy company, correct?

MCLEAN: No. Our contention is that Enron wasn‘t a great company that was brought down by a bad CFO. It was a fundamentally weak company that was for a period of time propped up by him. Remember, when Enron went bankrupt it had $38 billion dollars worth of debt. Only 12 billion of which was on its balance sheet. The company produced no cash flow. That‘s not a recipe for a healthy company.

Coming up, a new report suggests even conservative White House lawyers didn‘t support the administration‘s domestic surveillance program.

And new details in that Massachusetts murder case, a mother and her baby murdered in their home. The father now in England. Police had hoped to interview him. He‘s apparently refusing to cooperate.

Plus, a former priest and admitted child molester confronts his victims and their family, as the families hand out fliers. We‘ve got the confrontation on tape. We will talk to a victim and the father who were there.

Your e-mails abramsreport@msnbc.com. Please include your name and where you‘re writing from. I respond at the end of the show.

(COMMERCIAL BREAK)

ABRAMS: In the debate over the warrantless domestic surveillance program it may feel like it is Democrat versus Republican, liberal versus conservative, but this week‘s “Newsweek” magazine reports the questions about the program go far deeper than that. It is a blow-by-blow account of battles amongst conservative lawyers.

The victors included those who seem convinced President Bush can exercise -

quote—“virtually unlimited powers in the war on terror.” The leader of that movement, Vice President Cheney‘s chief of staff and former counsel David Addington who according to the article made sure dissenters were “cut out of the loop”—quote, unquote.

The article points out that former Deputy Attorney General James Comey who resigned last summer, led a cadre of rebels. Comey seemed to refer to them when he left, saying some of them did pay a price for their commitment to write but they wouldn‘t have it any other way.

A spokesman for the vice president‘s office says the proposition of internal division in our fight against terrorism isn‘t based in fact. This administration is united in its commitment to protect Americans, defeat terrorism, and grow democracy.

“My Take”—this is an important and well-researched article that should be read. Apparently in this administration it is not enough as a legal matter to be a principled conservative. Forget about the liberals who oppose this program. Former United States attorney from Manhattan, James Comey, is a Republican, a conservative, a hard-nosed guy who‘s been fighting the war on terror and prosecuting terrorists well before 9/11.

No one can suggest he is soft on terror, but he‘s a principled lawyer who pushed for some sort of judicial oversight. For that, according to this report, he was mocked by the president and eventually stepped down. That is shameful.

ABRAMS: Is this the reason that many of them left the administration was because they were having these battles where they were saying look we think there should be judicial oversight and they were being minimized and ignored?

KLAIDMAN: These were extremely tough fights and in some cases some of these lawyers actually were essentially blocked promotion within the administration. One in particular who raised questions about the NSA program was slated to get a very senior job in the Solicitor General‘s Office in the Justice Department and David Addington, with the blessing of the vice president, basically said you are not going to get that job and he didn‘t.

In other cases people left embittered, but you can argue whether they were forced out or left on their own. But people went through pretty tough experiences and for different reasons decided to leave government. In any case, all of them have left, which isn‘t to say that there aren‘t others who are principled and may at some point have a crisis of conscience and stand up you know for what they believe, but these people all left.

ABRAMS: But in the article you say that Addington—quote—“made sure dissenters were cut out of the loop.” What does that mean?

KLAIDMAN: Well there was—really from the beginning of—you know after 9/11 and you could understand there was an impetus to move as quickly as possible to get these policies in place. You know bureaucracy can move at a glacial pace sometimes and there is this sort of inner agency process where all of the lawyers from all of the various agencies had to weigh in.

And so there was an impulse to move very quickly. And in that case, a lot of people were essentially cut out of the process. Now, in the beginning you can understand why they‘d want to move quickly. But over time, you clearly need the views of all of the interested parties to make sure you are getting the best advice.

ABRAMS: Yes.

KLAIDMAN: And so people at the State Department, people at the NSC, the uniform lawyers, the JAG lawyers at the Pentagon were essentially cut out of some of these important early decisions.

ABRAMS: All right, Dan Klaidman, if you can stay with us for a moment. I want to bring in our other guest here, Aitan Goelman, former federal prosecutor who worked for Jim Comey when they were both federal prosecutors in New York, David Rivkin, former White House counsel and Justice Department official who worked in two Republican administrations in his tux. He‘s heading to an event.

DAVID RIVKIN, FORMER WHITE HOUSE COUNSEL: Not at all. And let me say a couple of things. First of all, it‘s a well-researched article. Events (UNINTELLIGIBLE) in retrospect may not seem as tidy. I can tell you I spent over 10 years in the government (UNINTELLIGIBLE) where I was involved in debates, which happens on all sorts of policy issues and I read the accounts of it. They were technically true but give somewhat a misleading impression as to the intensity of debates, very important to appreciate the debates were about nuances, aspects of the program. With all due respect, Dan, it was not about whether you need a warrant (UNINTELLIGIBLE) involvement. It was about how to minimize and the article even makes this clear...

KLAIDMAN: Actually, I agree with that.

(CROSSTALK)

KLAIDMAN: In the case of the NSA program...

(CROSSTALK)

KLAIDMAN: ... I agree with that. That‘s right.

RIVKIN: So there‘s more in accord among the people involved and it‘s almost ironic that the critics are trotting this out when they should be reassured by it. Look bottom line is...

ABRAMS: But wait, here is what bothers me about it, David...

(CROSSTALK)

ABRAMS: ... is the fact that the dissenters were cut out of a loop and that all of them left the government.

RIVKIN: But let me just suggest even the article acknowledges that (UNINTELLIGIBLE) who was allegedly on the hard-line side left the government and so did Jack Goldsmith, both of whom by the way I know well, are friends of mine. I will tell you this. Bottom line, your viewers should be reassured by the existence of what I call bureaucratic checks and balances that you do have those debates among (UNINTELLIGIBLE) people, but it‘s not enough for the president or attorney general to say do something and everybody marches like a bunch of...

ABRAMS: Wait, but they are having a debate—let‘s be clear—they‘re having a debate about whether they even need to go to any sort of court. I mean it‘s really sort of shifting the whole debate very far to the right.

RIVKIN: No, they‘re having a debate, to be very precise, about how to structure the program in such a way as to minimizes domestic footprint so you don‘t have to go to FISA...

ABRAMS: But there is—right, there is no program if you don‘t have to go to the FISA court. Then it‘s purely just how they‘re going to go about doing it, whatever it is that they want to do...

(CROSSTALK)

RIVKIN: You‘re absolutely right. How the executive...

ABRAMS: Right.

RIVKIN: ... a warrantless program...

ABRAMS: Right.

RIVKIN: ... using his own authority, which is fully legal and been upheld by (UNINTELLIGIBLE) but does not run (UNINTELLIGIBLE) FISA. That is a legitimate debate.

AITAN GOELMAN, FORMER FEDERAL PROSECUTOR: Actually Dan, I kind of am. I think the Department of Justice acquitted itself pretty well here. I mean you want, you know, the function of the office of legal counsel in the Department of Justice is to be the president‘s lawyer. And you know the president‘s lawyer both advocates on behalf of the administration, but the OLC, what it does is it provides legal advice. It is supposed to call it as it sees it. It is supposed to you know not to try to get to a particular place and just think up a legal rationale for getting there, but instead to make you know a reasoned way...

ABRAMS: But if the people who are dissenting are being cut out of the conversation and they‘re being cut out of a loop because of their views that doesn‘t seem to me to be—that‘s the part that bothers me.

(CROSSTALK)

ABRAMS: I agree with both of you that it is a welcome revelation that there was so much debate with the administration about this, but the notion that a guy like James Comey, again, this is not a liberal guy. This is a conservative, straight conservative, straight talking guy who was, you know apparently extremely frustrated by the way things were going.

RIVKIN: But Dan one point. Jim Comey served longer than John Ashcroft. Mr. Comey wasn‘t fired. He over lapped the service of two attorney generals...

ABRAMS: Wait, wait, wait, wait. You are not questioning that James Comey is a Republican, are you?

RIVKIN: I think this has nothing to do with Republican or Democrat. My point is the man served many years in the Department of Justice under two attorney generals, John Ashcroft and Alberto Gonzales. How did he suffer? How was he retaliated against? I don‘t see that.

ABRAMS: I don‘t think I used the word retaliated against. I think I said stepped down and Dan Klaidman look, you are the one who really knows this, is there a sense that the reason he stepped down was based on frustration or do we not know?

KLAIDMAN: You know I don‘t know whether—I never spoke to James Comey. He wouldn‘t talk to me, so I don‘t know exactly why he stepped down. What I do know is that those people who were standing up for their principles felt like they would not been able to have achieve their objectives. And remember we‘re not just talking about the NSA program here. We‘re also talking about the withdrawing of the torture memos. This is what Jack Goldsmith did.

KLAIDMAN: He said these legal opinions are bogus. The rationale for torture is...

ABRAMS: Yes.

KLAIDMAN: ... you know and without Comey, he wouldn‘t have been able to do some of those things...

ABRAMS: Yes.

KLAIDMAN: ... and that‘s true of the NSA program...

ABRAMS: All right.

KLAIDMAN: ... the modification of that program.

ABRAMS: I got to wrap it up, but I think we all agree, Dan, this is a researched—a well-researched article and well worth reading. I recommend everyone take a look at this in “Newsweek” magazine or even on our Web site.

Aitan Goelman, David Rivkin, Dan Klaidman, thanks a lot and have a good time at your event David.

ABRAMS: A heated confrontation between a former priest and the victims who say he abused them. We‘re going to talk to one of the victims who was there.

(COMMERCIAL BREAK)

(NEWS BREAK)

ABRAMS: We‘re back. New details in the murder mystery in Massachusetts. It‘s been more than a week since the bodies of Rachel and Lillian Entwistle were found in their suburban Boston home and as their family prepares to lay them to rest, there are reports the crime scene may have been compromised and that Neil Entwistle, the husband and father, is refusing to cooperate with American authorities.

Twenty-seven-year-old Rachel and 9-month-old Lillian were found shot to death, wrapped in a blanket in an upstairs bedroom a week ago Sunday. It turns out the police had been inside the home in the bedroom once before finding the bodies and that Rachel and Lillian‘s family members and friends had also been there.

It also seems there are growing tensions between Rachel and Lillian‘s family members and Neil Entwistle. In recent days obituaries in a local paper did not mention the loving husband, Neil. And in the family‘s first public statement they made no reference to the man who seems to have fled the country and is reportedly hold up in his parent‘s house in England.

(BEGIN VIDEO CLIP)

JOE FLAHERTY, FAMILY FRIEND AND SPOKESMAN: The entire family is overwhelmed by the loss of Rachel and Lillian in the events of last weekend. We are also grateful for the outpouring of prayers, love and support offered by family, friends and strangers alike.

Rachel was a wonderful wife, daughter, granddaughter, sister and mother. With the birth of Rachel‘s daughter Lillian Rose Entwistle last April Rachel shared her greatest love, that of being a mother. As the family continues to grieve, we also celebrate and are thankful for the time we had with Rachel and Lillian. The family has every confidence that the Middlesex District Attorney‘s Office, Martha Coakley‘s office, along with the Massachusetts State Police and the Hopkinton Police Department will solve this case and bring to justice those responsible.

ABRAMS: Joining me now is the “Boston Herald” reporter David Wedge, former prosecutor in Massachusetts, Bill Fallon, and criminal defense attorney Jonna Spilbor. Thanks to all of you.

All right, David, let me start with you. We had been under the impression on Friday that the husband had been meeting with the authorities. Is it now clear that was not the case?

DAVID WEDGE, “BOSTON HERALD” REPORTER: Our best information from the authorities here that we have spoken to is that he never did go to the embassy and he never did speak to authorities, contrary to what has been reported by the British law enforcement officials. Apparently those reports from the British officials were wrong.

ABRAMS: So he has not met with American or British authorities to be questioned?

WEDGE: He did leave his home with the Nottinghamshire police in England. They did not question him. He was supposed to go meet with the Massachusetts investigators and that meeting never took place. He never answered any questions from the Massachusetts authorities.

ABRAMS: You know David it seemed to me so far that all of the information we‘re getting from either the British authorities, the British papers has been very sympathetic to Neil Entwistle. I mean we had the D.A. in from Massachusetts, Martha Coakley, on this program saying he was a person of interest and then you know the next day the British authorities are saying well not really. He‘s just wanted for questioning as a witness.

Then Martha Coakley puts out a statement saying he is a person of interest. And now today we get “The Observer” from January 29 reporting last night the police announced they were investigating a possible vendetta against the Entwistle family...

(CROSSTALK)

ABRAMS: ... after threatening e-mails against Rachel were discovered. One posted just weeks before the double murder read Rachel Entwistle is a thieving liar. Fellow users of the Internet auction site eBay warned buyers to go nowhere near the Internet interests of Rachel and her husband Neil from Britain.

I mean is that the British spin on it because he‘s a British citizen or do you think that‘s really where the investigation is going?

WEDGE: That—my opinion is that there is a real spin coming out of Britain. Whether or not it‘s being orchestrated by someone close to the Entwistle family that‘s up for debate. But clearly as you referred to that “Observer” story, that—those threats on the eBay site have been out for days and that‘s clearly just a spin that that media outlet chose to put on those threats.

As far as we can tell, the investigation here is moving forward. No one has made any mention of any other suspects. No one has called Mr. Entwistle a suspect, but clearly...

ABRAMS: Yes.

WEDGE: ... they weren‘t able to speak to him and the investigators are now home without having spoken to him and now they‘re going to have to try and build a case here against him or whoever else...

ABRAMS: Yes.

(CROSSTALK)

ABRAMS: Bill Fallon, when a prosecutor like Martha Coakley comes out and says person of interest, that likely does not mean they are looking elsewhere and they just want to talk to him.

WILLIAM FALLON, FORMER ESSEX COUNTY MA PROSECUTOR: Well Dan, Martha Coakley is a superb prosecutor. She knows you don‘t want to say he is a suspect. Part of the reason is that rush to judgment that everybody talks about.

Everybody knows that a family member involved who skips the country by the way is at least a person of interest. The only reason you don‘t say a suspect is because if in fact the trail leads somewhere else they don‘t want you to say oh you thought the husband was a suspect or someone else was a suspect. There is no doubt that if there are—there might be an unnamed person of interest and this is the named person of interest.

ABRAMS: Let me ask...

FALLON: I don‘t have the inside information. He certainly did not do himself any favors by not speaking out about...

ABRAMS: Let me assume—let me ask you a hypothetical. Someone comes to you, they say my wife and child have been killed. I know the authorities are looking at me as a possible suspect. I want to do whatever I can to help the authorities. I had nothing to do with this.

I want to go home. As a lawyer do you say no, no, no, don‘t do it? I can‘t imagine that‘s the advice you give them.

JONNA SPILBOR, CRIMINAL DEFENSE ATTORNEY: Oh that is the advice...

ABRAMS: Even if they say I want to help, you tell any family member don‘t help the investigation because you never know.

SPILBOR: I‘m absolutely saying that. I would probably tie him in my office until I convince...

SPILBOR: It‘s criminal defense and here‘s why. First of all, the first thing they‘re going to want to do is polygraph the guy. Polygraphs have a place on “Jerry Springer”. They are not a very good investigative tool. Second of all, defendant is always his own worst enemy.

And in this case you know this guy is a suspect. He is not a person of interest. He is a suspect, and right now he‘s the only suspect. So wait until the case shakes out a little bit before you have your client talk to anybody. Now I do disagree...

FALLON: Jonna...

SPILBOR: ... with the fact that he‘s in England not attending his services and not flying back to find out what in the world happened to his family. That concerns me...

ABRAMS: Yes.

SPILBOR: But for right now I would tell him to sit down and shut up.

ABRAMS: Bill, very quickly...

FALLON: Dan, you know what? But by staying there—let me just say by him staying in England, this is the thing that really pointed to it, and so if they ever get evidence, when the jury finds out he flew the coup, didn‘t go to the jury—didn‘t go to the funeral, didn‘t go to the wake, why isn‘t a spokesman over in England coming out and saying he is afraid to come back because he doesn‘t know what happened. He has said nothing and that is the type...

ABRAMS: This is...

FALLON: ... of thing that‘s going to get him in trouble.

ABRAMS: Yes. I mean he‘s got to come back. I mean he‘s just got to come back and deal with this, period. All right. David Wedge, keep us updated on what‘s going on. Bill Fallon and Jonna Spilbor...

ABRAMS: ... sorry, I wanted to talk more about this. We ran out of time.

Coming up, a shouting match in one New Jersey neighborhood as parents and victims of priest sex abuse confront a priest who had admitted to abusing them. We will talk to a victim and a parent who was there, coming up.

(COMMERCIAL BREAK)

ABRAMS: Coming up, a heated confrontation between victims of a priest sex abuse case and the priest who allegedly abused them and it‘s all on tape, coming up.

(COMMERCIAL BREAK)

ABRAMS: We‘re back. Emotions boiled over in a quiet New Jersey suburb this weekend as a defrocked priest came face-to-face with his victims and their families. It was an unplanned but dramatic confrontation when James Hanley pulled in to his neighborhood to find a group handing out fliers, alerting neighbors of his dark history as a child molester.

Reporter Pei-Sze Cheng of our NBC station WNBC has the story.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Nice to see you again (UNINTELLIGIBLE).

PEI-SZE CHENG, WNBC REPORTER (voice-over): Disgraced Priest James Hanley confronting angry members of his community. He stares down the father of three molested boys.

UNIDENTIFIED MALE: You did. If you did it to me and two other brothers you did it to my dead brother.

UNIDENTIFIED FEMALE: You did it to three of my sons, James Hanley.

(CROSSTALK)

UNIDENTIFIED MALE: You are a sick man...

CHENG: During the emotional and angry exchange, former Catholic Priest James Hanley both apologized and denied what he had previously admitted under oath saying he abused some of the boys but not all of them.

UNIDENTIFIED MALE: If that‘s what it means that I lied again, yes. I was under oath, yes, but in order to get it off my back and to put an end to it so that you guys could have the money that you wanted I said yes, I did.

CHENG: Hanley told reporters he abused the boys from 1968 to 1981 while serving at parishes in Mendham, Pompton Plains and Parsippany. Hanley also says he too was abused when he was young.

JAMES T. HANLEY, DEFROCKED PRIEST: I‘m an alcoholic. I‘m a manic depressant. I suffered from diseases. I‘m a psychotic and a psychotic does strange things sometimes you know.

CHENG: But talk of his problems was not enough to erase the damage done to his victims and did not deter these men and women from their tasks.

L. SERRANO: I confronted him before. I confronted him three years ago in the address he had been at before this new address...

ABRAMS: And...

L.SERRANO: ... just to remind him what he did to my son. And then no matter where he goes I will find him to remind him of that and to keep tabs on him and track him because there are other children out there that are potential victims.

ABRAMS: Mark Serrano, were you surprised that there was actually this sort of this confrontation that he walked up to the group?

M.SERRANO: Well it was a surprise to the degree of anger that he showed because he has admitted his crimes. It‘s a very disturbing encounter (UNINTELLIGIBLE) for the victims and their families. But you know what was really encouraging is the fact that we learned that soon after moving into his new house, Father Hanley had already enjoyed a family meal with his next-door neighbors where they have children, sons ages 10, 6, and 3, and he brought them balloons and clearly I believe those were his next victims and we were able to notify that family so those kids could be protected.

ABRAMS: How old were you when he was molesting you?

M. SERRANO: Between the ages of 9 and 16. He sexually molested me from masturbation to oral sex and he was methodical and was very patient and groomed me over the course of a long period of time. As disturbing as that exchange was, Dan, is the fact that Jim Hanley is not alone.

There are hundreds like him and Catholic bishops because they shielded them from prosecution have let these men back in the community or they live on church property. We were doing the job that Bishop Arthur Serratelli from the Diocese of Paterson should be doing, is notifying the community about a dangerous predator.

ABRAMS: Mr. Serrano, how did you find out first a while back about the abuse?

L.SERRANO: Well Mark was home from Notre Dame on a Christmas holiday, you know, vacation and he told me. And when he first told me, the abuse wasn‘t as serious as I learned later on from Mark. You know, I thought it was just fondling and that type of thing. We told his mother on New Year‘s Eve. I didn‘t want the—I didn‘t want her to be upset over the holidays, so we told her on New Year‘s Eve. That‘s 1985.

ABRAMS: And Mark, do you intend to make sure you know where this guy is at, at all times?

M.SERRANO: Sure. I mean I believe there are more recent victims and if we encourage them to come forward, then we can get people like Jim Hanley behind bars. And that‘s why it‘s so important for us to speak out and encourage victims that it‘s safe to come forward.

ABRAMS: Mark, explain to me the conflict. I mean on the one hand, he seems to be admitting it. Then on the other hand, he seems to be changing his story.

M.SERRANO: Dan, I think we saw a sort of illustration of how a perpetrator thinks. He was so skillful in transferring guilt and shame to his victims I think he‘s still doing it. But he‘s also very—still very skillful. He‘s of good health and he can get around. And he has access to children right in his neighborhood, but you know because of our visit he hopefully won‘t anymore.

ABRAMS: Yes. Mr. Serrano, I assume as a former New York cop you wanted to just slug him when you were getting...

L. SERRANO: Well I‘ve been fighting that urge for years. It‘s not easy, but who would take care of my wife and seven children if I was in prison?

ABRAMS: Yes. Well your poise is to be admired and let‘s be clear. It was him who approached all of you. I mean I think...

M. SERRANO: And you know, Dan, we were there to just inform the community.

And we were just delighted at how they embraced us and welcomed us and they were so happy that we gave them information that my parents and my family and other families in my community didn‘t have the benefit of 30 years ago.

ABRAMS: Yes. All right. Mark Serrano, Lou Serrano, thank you both very much...

L. SERRANO: Thank you.

ABRAMS: ... for taking the time to come on the program.

L. SERRANO: Thank you very much.

ABRAMS: Coming up, why “The New York Times” should be ashamed of its coverage of ABC‘s Bob Woodruff‘s injures sustained in Iraq this weekend. It‘s my “Closing Argument”.

And our continuing series, “Manhunt: Sex Offenders on the Loose”, our effort to find missing sex offenders before they strike. Our search today is in Michigan, looking for Brent Dennis.

He‘s 22, six-one, 256, was convicted of criminal sexual conduct, has not registered with the state. If you‘ve got any information on his whereabouts, please contact Tri-County Sex Offender Registry Task Force, 866-501-SORT.

Be right back.

(COMMERCIAL BREAK)

ABRAMS: My “Closing Argument”—some thoughts on the injuries suffered by my friend Bob Woodruff over at ABC. I‘ve been thinking about him nonstop for the past 24 hours and praying for his full recovery. First, the downright insulting “New York Times” coverage of the attack on Woodruff and his cameraman Doug Vogt. Part of the headline reads “Latest Blow To Network” and “Field Reports Were A Ratings Strategy”. Ratings strategy? He was there because he was a reporter, a darn good one.

The same reason “The New York Times” has reporters there, risking their lives, to cover the most important story facing this country today. Are their reporters there just to add readers? At all the major networks, no one is forced to go to Iraq. You have to volunteer. And he did. He was doing exactly what his network and viewers would expect of him and taking the necessary precautions, as well.

The “Times” should issue an apology for its story. OK, now many are also asking why is his injury getting all this coverage when this and worse is happening every day to our troops. That‘s a fair question. The answer is not entirely satisfying. In fact, Woodruff would almost certainly agree that there is something troubling about it.

The reality, Bob Woodruff he also a public figure. If he were robbed in the U.S. or quit his job, it would also be news. But let‘s also remember why Woodruff is there. It‘s to tell the troop‘s story. It‘s so the rest of us who are back at home can appreciate what the brave men and women fighting for our country are enduring every day, so everyone from loved ones to the public at large can have a better sense of what is really happening in this war.

His injuries serves as an important reminder about the level of danger our troops face every day. When former NFL star and Army Ranger Pat Tillman fighting in Afghanistan, it received far more media attention than other deaths. Often the media tells broad stories by focusing on individual people known to viewers. If a lesser-known reporter was injured in Iraq, it would not have received that much coverage either.

Look, it‘s easy to bash the media and it‘s sometimes hard to defend them, but when it comes to one of the good guys like Woodruff doing important work to show us what our hard-working men and women are facing every day, it‘s easy. Bob, we‘re hoping to see you soon.

ABRAMS: I‘ve had my say, now it‘s time for “Your Rebuttal”. We just got one—time for one e-mail. On Friday I spoke to Daniel Petrocelli, attorney for former Enron CEO Jeffrey Skilling. He said his client is relieved to finally go to trial and get the fact of his story out.

Nancy Kay in Houston, Texas asks, “If the Enron crooks are so happy that the trial is finally starting, why are the defense attorneys still filing motions to delay the trial?”

Your e-mails abramsreport—one word -- @msnbc.com. We go through them at the end of the show.

That does it for us tonight. Coming up next, “HARDBALL” with Chris Matthews. Chris has gotten an exclusive interview with Tom DeLay. Stay tuned for that.

See you tomorrow.

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